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Thanks very much for explaining this NRL. You're a great asset to this BB. I totally agree that although the interest as it stands is expensive, the fact remains that Stroll and his colleagues are turning the Company around. I am particularly impressed by TM and think the changes and improvements that have taken place during the short time that he has been in charge are amazing :-))
Carpymick – re your posts of 23:08 and 23:28 yesterday, the relevant places are page numbers 168, 169 and 171 of the prospectus. The 1st part states "Prior to 1 November 2024, the Note Issuer [i.e. AML] may redeem, at its option, the New Senior Secured Notes [i.e. the $1,085,500,000 million notes at 10.5%] in whole or in part, by paying a “make-whole” premium. From 1 November 2024, the Note Issuer may redeem, at its option, the New Senior Secured Notes, in whole or in part, at 100.000% of the principal amount of New Senior Secured Notes redeemed, plus accrued and unpaid interest and additional amounts, if any". Make-whole premium is not defined and only used in 2 places in the prospectus. In my view that is all interest that would have been paid if the notes ran their term, lender's legal costs etc.
It then goes on to state "Prior to 1 November 2024, the Note Issuer may redeem, at its option, up to 40% of the New Senior Secured Notes at 110.500%, plus accrued and unpaid interest and additional amounts, if any with an amount equal to or less than the net cash proceeds from one or more Equity
Offerings (as defined in the New Senior Secured Indenture) to the extent such net cash proceeds are received by or contributed to Aston Martin Investment Limited; provided that in each case the redemption takes place not later than 180 days after the closing of the related Equity Offering and not less than 50% of the original aggregate principal amount of the New Senior Secured Notes originally issued on 16 November 2020 remain outstanding immediately after the occurrence of each such redemption." This is why I thought they could only redeem a fraction. I would add the prospectus makes clear this is governed by New York law so the provisions pasted here may have an entirely different meaning in a New York court to my English common sense approach.
You then have "the Second Lien Notes will accrue at the rate of 15.0 per cent. per annum, comprised of 8.89 per cent. cash interest per annum plus 6.11 per cent. interest paid in kind per annum". These have different early termination provisions – "Prior to 1 November 2023, the Note Issuer may redeem, at its option, the Second Lien Notes in whole or in part, by paying a “make-whole” premium. From 1 November 2023, the Note Issuer may redeem, at its option, the Second Lien Notes, in whole or in part, at 108% of the principal amount of Second Lien Notes redeemed, which redemption price reduces to 104% on 1 November 2024 and further reduces to 100% on 1 November 2025, in each case, plus accrued and unpaid interest and additional amounts, if any". Perhaps these notes may be redeemed in November 2023.
Key points from original post I made that I re-iterate are (i) the management were happy with these rates and (ii) I am expecting us to be lumbered with these rates for some time. Agree it is a drain and effects profitability. But it is a known issue and the business is being turned around by Stroll, Moers, Grego
Effectively, you’re saying he would be ‘forcing’ himself (AML) to accept a higher rate of 10.5%! If that were deemed outside of acceptable margins for such an issuance, that would be an abuse of his position and hence a conflict of interest
My point is he can’t be benefiting personally, directly or indirectly from the Bond deal - particularly if AML FORCED TO PAY 10.5%. If this percentage was deemed overly high when looking at the market place and Stroll signed off on it whilst benefiting from the future payments AML will pay, it would be a conflict of interest! It would simply be exploitation of his position at AML and whilst I know we live in a corrupt world, I cannot for one second believe something so blatant as that could be lawful.
https://www.ft.com/content/a0864c3c-6c20-4415-b95d-9eb729f128fa
"Aston has privately placed this debt with unnamed investors, which also received the added incentive of equity warrants that could hand them 5 per cent of the company."
You think Stroll decided to incentivise people he doesn't know?
When MGFX brought this up at the time, he also was lambasted by people who have no clue.
MGFX, where you at?
And in fact, the more I think about it, I doubt Stroll or anyone else linked to AML is benefitting from the debt repayments. As you said yourself, they went to market wanting to pay 8-9% interest on the debt but it was much higher so if he had any part to play in that directly or indirectly and stood to benefit personally it would be seen as gross manipulation for personal gain and hence a conflict of interest
C26, you don’t do yourself any favours do you. Re-read my post and tell me where I said IT WAS unlawful? You’re the only person I know who’s in bad company when he’s on his own! As I said, I DONT KNOW FIR SURE but from my own limited business experience, it sounds like it would be a conflict of interest if it were to be the case that Stroll and anyone else directly or indirectly linked to a position of significant control over AML were to benefit from the bond issuance. I would have thought it would have to be stated in the annual accounts if it were legal at the very least. I will attempt to seek some clarification from colleagues. In the meantime, try to just to project a little class instead of being an ar5e!!!!!
or...
"the action or process of reducing or paying off a debt with regular payments"
That's what I was getting at, AML are paying off the interest, but not the £1.3bn debt.
Depreciation is typically write down of assets, so spreading capital expenditure over a period of years. Amortisation is writing off an intangible asset as an operational expense - helps reduce tax bill.
Are the £1.3BN in bonds amortised yet Carpy? ;)
Hang on a minute C26. I'm no accountant but surely you can't take off CAPEX and depreciation and amortization.
They are both the same thing basically aren't they? One is the depreciation of the other. I think the tax man would have something to say about that!!
Seems like Stroll or entities he controls would qualify as qualified institutional investors so I don't see how that would be illegal. I'd rather it be Stroll than Russian oligarchs like our past president's business.
https://www.investopedia.com/terms/q/qib.asp#:~:text=An%20investor%20is%20dubbed%20a%20qualified%20institutional%20buyer,to%20require%20less%20regulatory%20protection%20than%20unsophisticated%20investors.
Carpy, I was right....I take it back, haha.
EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization
"Depreciation and amortisation c. £240m-£250m for 2021.
So you need to subtract that from the £65 million profit you calculated earlier
So 10k sales and £500m EBITDA means a loss of £175m.
Sorry!
@Chat, I'll take that as "I can't find a link which proves it's unlawful, so I am running away and not talking to you any more".
I'll state it plainly for you right now:
There is nothing unlawful about lending money to your own company, Stroll did it when he took over last year. AML needed (from memory) £50m to stay afloat, it's all on the record. Roughly Feb/March-June if my memory serves me correctly.
Why do you think they refuse to disclose the names of the bondholders?
Have you ever known any other company who refuses to name bondholders? (Me neither)
Why would Stroll take majority interest with his pals, set up rules to stop anyone else gain a majority interest, and then borrow from bondholders who aren't his pals? You know bondholders are first in line, well in front of shareholders if company becomes insolvent, so there is no point having a majority stake if the bondholders walk away with all the goods.
How can I be 'looking for glorification of how smart I am', as everyone argues against me, and recognition for anything I bring to the table is non-existant?! That's hilarious.
Back to the facebook group with you...
@Doyezee and Chat.
Please share a link which shows this is unlawful?
Sorry Carpy, you are correct, I was confusing 2 arguments there.
I think Stroll's plan are hugely ambitious for 2025, and you think they will be beaten, that's cool.
I'd be happy with AML making a profit in 2025, though.
Sorry I've not been in communication this am but Im out of town sat in hospital patiently waiting to see my consultant for a review lol.
I dont understand why C26 is saying EBITDA of £500m won't even pay the interest. Based on his figures it still leaves a profit, admittedly small as follows- £500m less £160m interest plus £275m CAPEX = £65m profit remaining. Or am I missing something. Also please remember that the majority of us have agreed that the EBITDA target of £500m is conservative and we expect it to be overachieved.
I don’t know for sure but I’d be surprised if it were lawful for Stroll or anyone else directly linked to and in a position of direct control over the company to directly or indirectly benefit from any form of lending to the company other than by way of a Director loan or similar. It would be too easy and a conflict of interest if he/they were to have benefitted from the bonds. They could just take their 10-15% over the term, bleed AML dry and walk away writing off any other losses against tax. Plus I don’t think the likes of Moers & Co would be there if that was the game plan. For me, they can’t be benefiting and part of the bond debt as it would be a conflict of interest in that form plus even if it were lawful, it would have to be declared in the accounts.
It's true no matter where the money came from.
Lenders are in charge Jack, all over the world.
Ask yourself why the company wanted 8-9% and ended up paying 10.5-15%.
"it doesn't really matter what the prospectus says"
That's very unlike you... And it's only true if your assumptions are correct about where the money has come from. If your assumptions are wrong then the prospectus and whether it reveals the possibility to refinance the debt is IMO one of the most important factors of aston Martins mid term outlook
It really doesn't really matter what the prospectus says.
It said guidance for the debt would be 8-9%, but the lenders demanded 10.5% and got it.
AML also stated guidance for 10.5% for the 2nd lien, and the lenders got 15%.
And if you think Stroll and all his cronies let someone else have control of bonds (first dibs on the company if it folds) and offered them make 15% interest every year, instead of themselves, then.... well.....
So we're back to square one, and my original statement: Stroll's target of 10,000 car sales and £500m EBITDA in 2025 doesn't even cover the interest charges on the bonds.
Sorry, my note was cut shot. I copy and pasted from Exhibit A of the Senior Notes Indenture which is immediately following page 125.
It is also almost identical wording for the Second Lien Notes Indenture Also at Exhibit A following page 125. To be honest the majority of the documents is like reading a foreign language to me. I just scanned it but it will obviously make a lot more sense to some of you. Happy bedtime reading if you fancy giving it a go. It's better than counting sheep I promise you...zzzzzzz
NRL. Finally found some time to look at the prospectus. Im afraid its a bit deep for me but I found a section that seems to say you can refinance after 12 months I may be interpreting it wrong as Im not used to reading this kind of stuff. The 15% bond is similar wording.
10.5% Senior Secured Notes due 2025. THIS SECURITY HAS NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND, NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, [IN THE CASE OF RULE 144A NOTES AND REGULATION S NOTES: (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE U.S. SECURITIES ACT (“RULE 144A”)) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION PURSUANT TO RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND (2) AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS [IN THE CASE OF RULE 144A NOTES AND RESTRICTED GLOBAL NOTES: ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS SECURITY, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES, AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)] [IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS SECURITY, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES, AND THE DATE ON WHICH THIS SECURITY (OR ANY PREDECESSOR THERETO) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S)] EXCEPT ONLY (A) TO THE ISSUER, THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO AN OFFSHORE TRANSACTION TO PERSONS WHO ARE
Get your self on the Aston Martin share holders page dunnie, it's good crack!